A statement that resounded like an article of faith: “By 2050, our planet will be home to an extra 3 billion people. This creates enormous opportunities for a group like [H&M], of course. But it also means a huge impact, if the industry continues to function as it currently does. Innovation must enable us to find new solutions, to shift the industry towards a circular model. And we can play a major role by promoting innovation.”

Karl-Johan Persson speaking at the H&M Foundation’s conference on April 3 - FNWOn April 3 in Stockholm, the keynote speaker at the annual H&M Foundation conference on CSR and new technology wasn’t the person in charge for the group’s eco-sustainable or innovation policies. It was Karl-Johan Persson, general manager of the powerful Swedish fast-fashion group founded by Persson’s grandfather nearly 70 years ago.

On the same evening, his father Stefan Persson, chairman of the family group’s board of directors [Persson family members hold over 70% of the voting rights among the group’s shareholders] presented the foundation’s Global Change Awards for the first time, and he too echoed the same sentiments .

FashionNetwork.com visited H&M’s Stockholm headquarters to try to understand the group’s sustainability and CSR approach, with a few questions in mind. Above all, how is H&M able to develop an approach consistent with its business model, considering that in 2019 the group generated a revenue of over €20 billion, operated 4,968 stores and worked with 2,383 factories and suppliers worldwide.

Faced with this challenge, the group’s eco-sustainability message hinges on communication and product development. To provide greater insight into its initiatives, H&M staged at its Stockholm headquarters a meeting to illustrate its progress and the approach it adopts towards eco-responsibility and innovation.

Notably, H&M reasserted the pledge to reduce carbon emissions (it aims to make its own operations ‘climate-positive’ by 2040) and to be more transparent about the way it works, and emphasised its ground-breaking use of more sustainable materials. To progress along this route, H&M is working closely with partners with a recognised track record in terms of environmental and social responsibility, like Global Fashion Agenda, organiser of the Copenhagen Fashion Summit, the Ellen MacArthur Foundation and the WWF.

The annual publication of H&M’s environmental and social impact report gave the group the opportunity to assess how it is improving in those areas. H&M announced that, in 2019, the eponymous label’s website will incorporate detailed information about its products’ sourcing process, something which is already available on the site of another of the group’s labels, Arket. In terms of social responsibility, H&M emphasised the ‘Fair Living Wage Strategy’ programme, designed to enable workers at the group’s sub-contractors’ factories to set up employee representation bodies in order to improve their working conditions. Also, one of the mainstays of the group’s CSR strategy is to make its material sourcing more responsible.

The executives in charge of innovation and eco-sustainability for H&M at a presentation in the group’s Stockholm headquarters - FNW

In the report’s 2018 edition, H&M underlined that 57% of the fabrics used for its clothes are recycled or sustainably sourced. The group made major inroads with regards to cotton, claiming that 95% of the cotton it uses is sustainably sourced or recycled. The goal is to reach 100% in 2020. And while 79.9% of the cotton it uses is certified by BCI (Better Cotton Initiative), an organisation which promotes better cotton farming and practices, H&M’s use of organic cotton also increased last year. It accounted for 14.6% of the group’s cotton-based products, compared to 12.1% in 2017. For the time being, recycled cotton only accounts for 0.3% of total output.

Alternatives to cotton

At any rate, even if the group is improving its sourcing practices for this specific fabric, worldwide demand for cotton, especially sustainable cotton, is likely to experience tensions in the medium term due to competition for arable land between different crops. “Cotton has many advantages but it also has many issues. We are looking at the future, to the challenges our planet faces and the way in which the sourcing landscape is likely to evolve. We are also looking at developing other sustainable materials,” said Anna Gedda, in charge of eco-sustainability at the H&M group.

Karl-Johan Persson and Stefan Persson amidst of the H&M Foundation’s 2019 Global Change Award winners - H&m FoundationThe winners of the H&M Foundation’s Global Change Award provide clues as to which direction to take. In the last two years, the award focused on generating fabrics from hemp, bananas, pineapple and nettles, alongside making new ecological, biodegradable water-proof membranes. Will these be enough to help H&M shift more quickly towards a 100% sustainable model?

“These processes and materials are currently available on a small scale only. They are yet to prove their relevance to large-scale production. They must upgrade from the lab to the next phase. Once they will have proved to be scalable, bigger suppliers will be able to utilise them industrially,” said Gedda.

Orange fibre, one of the new materials on which H&M is focusing

The group emphasised the possibility of making headway in this direction with a first collection produced using orange fibre, a prize-winning material at the first edition of the H&M Foundation’s Global Change Award four years ago. Orange fibre was used for H&M’s Conscious collection, featuring a limited number of items.

Yet, while the group heralds its intention to invest in the transition to a new model, the latter is still heavily reliant on apparel consumption and on regular new product launches to keep up with the latest trends. According to Arti Zeigham, in charge of AI for H&M, data analysis has the potential to help optimise production. “We call it ‘heightened intelligence’,” said Zeigham. “We provide additional support to decision-makers. We are working on how best to plan how many units we must buy of any product, and then ensure it reaches the market just in time, and in the right location. Supply-chain optimisation is what we are mostly working on. We estimate that this should enable us to cut our CO2 emissions by 10%,” he added.

Orange peel makes it possible to produce a fibre with a look similar to silk - Site H&MIn order to respond to the requirements of more sustainable manufacturing, H&M is focusing more on material recycling than on fabrics derived from food waste. The group claimed it is eventually aiming for a 100% circular and renewable output, without indicating a deadline. A major challenge, considering that, last year, the group was accused of incinerating tens of tons of clothes in 2017. The explanation offered by H&M was that small quantities of products must be incinerated because they are unfit for resale or recycling. For other products, H&M said it resorted to in-store and online promotions. Last year, it also launched Afound, a new inventory clearance fashion retailer which already operates four branches in Sweden.

Towards a more circular model

The group is increasingly setting its sights on new ways of doing business. Through its innovation think tank, the Laboratory, led by Laura Coppen, H&M has acquired stakes in ten or so start-ups working on innovative materials, new business solutions and unique products. The group’s premium fashion chain, & Other Stories, will soon experiment with selling second-hand clothes via one of these start-ups, Swedish website Sellpy.

Promoting circularity in fashion therefore seems to be one of the main growth drivers on which the H&M group is focusing for the next few years. In 2018, it collected approximately 20,000 tons of second-hand clothes at its stores. And it is targeting 25,000 tons for 2020. However, the industry at large is still unable able to reutilise in full all of these products to generate fresh resources for the textile industry.

“Certain products are suitable for the second-hand market. Nowadays, there is a lot of interest in automated sorting for textile recycling, which impacts fibre quality and length,” said Gedda. “And we are witnessing promising advances in chemical recycling, which allows fibres to be separated and subsequently converted into new materials,” she added.

H&M has notably invested in a project called Moral Fiber, for the recycling of polyester fabrics, and in Colorfix, which focuses on ecological dyes. According to the conclusions of the H&M Foundation’s one-day meeting on CSR, these innovations need to develop at a faster rate in order to shift to an industrial dimension and contribute to help the industry address the issue of climate change. None of the meeting participants “wanted to be remembered by history as the last generation which was able to act, but did nothing.” However, their message still needs to be heard by the fashion industry’s CEOs and CFOs.